The Omnibus Spending Bill Passed Into Law The EB-5 Regional Center Program Again

The EB-5 Program (the RC Program) was reauthorized as part of the Omnibus Spending Bill enacted by Congress last week, which extended through the summer of 2021 after having expired in the previous summer.

Senate Majority Leader Pat Leahy (D-VT) and Republican Sen. Chuck Grassley (R-IA) have been working on reforming and reauthorizing the RC Program for many years. When correctly negotiated, the revival of this Immigrant Investor Program provides a revitalized and valued source of foreign money that may be utilized in suitable job-creating projects around the United States.

As part of the EB-5 Reform and Integrity Act of 2022, several key aspects of the RC Program will be revised, including a five-year reauthorization time frame, an adjustment to the investment threshold amounts, a regulatory definition for targeted employment areas, several important investor protections, as well as additional security and integrity measures. Each of these critical components is highlighted in detail in this client alert.

What are the key aspects of the Program?

  • Reauthorization Adjustment of Base Investment Threshold

The RC Program was extended for five years, to September 30, 2027. The renewal raised the investment thresholds for immigrant investors from $500,000 to $800,000 in TEAs and from $1,000,000 to $1,050,000 in non-TEAs.

  • Statutory Targeted Employment Areas and Visa Set-Asides

The RC Program now includes TEAs, which include high unemployment regions, rural initiatives, and infrastructure projects. TEAs now qualify for reduced investment levels and visa set-asides. High unemployment regions are locations where the unemployment rate in a census tract (or contiguous census tracts) is at least 150% of the state average. Rural projects are located outside a metropolitan statistical region or inside a city or town of 20,000 or more residents. The new legislation also requires DHS to “prioritize” investor applications for rural projects. Construction projects are capital investment projects that a government body must manage via a regional hub.

20% of the RC Program’s visas will be earmarked for immigrant entrepreneurs in rural projects, 10% for investors in DHS-designated high unemployment regions, and 2% for immigrant investors in infrastructure projects. A new feature of the RC Program is that any unused visas from the 32% reserve will transfer over to the next fiscal year, potentially producing a more significant investment pool relying on the timing of the project and the number of remaining visas from the preceding year.

  • Investor Safety

The Immigrant Investor Program reauthorization wording contains crucial foreign investor protection features. Unmarried children of primary investors are now safeguarded from “aging-out” of their visa after age 21 if the principal investor is recognized as a permanent residence and the child’s conditional status has expired. To keep foreign investments “at risk,” USCIS was also told to create laws allowing EB-5 commercial firms to “redeploy” funds anywhere in the US. A “grandfathering” clause assures that if Congress fails to renew the RC Program by September 30, 2027, investor petitions submitted before that date will be processed regardless of the Program’s existence.

  • Measuring and Enforcing

Regional centers must now follow a stricter set of legislative standards to improve the RC Program’s integrity and security. Since no one convicted of a felony in the previous 10 years or civil fraud resulting in over $1 million liability may participate in the EB5 Program, USCIS has ample jurisdiction to disqualify regional center business proposals. USCIS is now required to audit and inspect regional centers at least every five years, and regional centers must submit yearly investment activity summaries to USCIS. Incomplete or incorrect submission of these statements may result in civil fines, suspension of operating privileges, or permanent “debarment” by USCIS. New “source-of-money” regulations will secure real investor funds. Reauthorizing wording stipulates that all EB-5 offers must comply with US securities regulations.

The renewal includes additional steps to ensure the security and integrity of the Immigrant Investor Program and its administration.

What are the next steps? 

Due to the reopening of the RC Program, all outstanding applications from immigrant investors who have been waiting since the Program expired last summer will be handled. Thanks to the EB-5 Regional Center Program renewal, participants of the Program will have access to a large pool of fresh foreign capital. More information is given by Ishaan Khanna, co-founder of the American Immigrant Investor Alliance, in an interview with Forbes.

What opportunities does the renewed EB-5 Program give? 

To navigate the renewed EB-5 Immigrant Investor Program successfully, you will need the assistance of an experienced team that is well-versed in its subtleties. Brownstein has more than a decade of extensive expertise in the management of EB-5 commercial and securities law concerns and government interactions on behalf of participants. We have completed EB-5 financings totaling well over $1 billion in value, representing projects with a combined value above $5 billion.